If you are anything like most UK citizens, your savings are probably not up to scratch. The Deadline to the Breadline report provides a frightening picture of the state of the average Briton’s precarious financial health, noting that most would run out of money in 29 days if their income were to suddenly stop. For working families (with breadwinners aged between 18 and 64) the picture is even more dire, with the time to breadline set at an average of two weeks. The survey also found that 36% of respondents had no strategy in place to cope with financial hardship.
The UK’s savings culture is worrying. The report found that the average monthly savings were just under £180. Almost 35% have no savings at all. With the cost of living increasing and benefits facing potential cuts, the need to protect your family’s financial health is vital, yet according to a Mirror poll only 4% of Britons have an income protection policy. In 2013, the average claim paid for individual income protection was £11,500. Such claims paid out on average for 230 weeks (more than four years), according to the Association of British Insurers.
Income protection cover provides protection for accident, sickness or unemployment or a combination of these, granting the insured a monthly or weekly payout for a period of time. While the state does offer Employment and Support Allowance to help those who cannot work, a report by This Is Money noted that this amounted to about £71 a week for the first 13 weeks and approximately £100 a week thereafter, which may not be sufficient to cover monthly expenditure, especially if the injured or unemployed person was the only breadwinner. Despite the potential benefits, income protection insurance is still not widely known or used, with Swiss Re reporting that, in 2014, a total of just 96,889 such policies were sold in the UK.
For information on income protection cover from Rated Financial Advisers, contact us today on 02084324566. Visit our site regularly for more interesting reads about the UK economy and its impact on your finances.